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Research & Development Tax Credits That Can Help Food and Beverage Businesses Grow

 

Food and beverage companies continually develop their products and work to streamline operations to remain both profitable and relevant as consumer palates and markets change, ingredient prices or availabilities shift, and new processes or machinery become available. These evolutions are critical to success, but they can also be expensive. Fortunately, many product development efforts and factory upgrades may be eligible for state and federal research and development (R&D) tax credits, which reduce taxes more than applicable tax deductions would. These often-underused tax credits can free up cash for further investment as they directly lower food and beverage companies’ taxable income and lighten their tax burden.

The basic requirements for the federal R&D tax credit are:

  1. the expense is directly related to creating a new product or process, improving an existing product or process, or attempting to do so;
  2. there is some technical uncertainty about the best way to create or improve the product or process; and
  3. you are using science, engineering, or computer science to resolve technical uncertainty during development or production.

R&D tax credits may help you with more than your federal tax obligations. Many state tax authorities apply standards identical or similar to those of the IRS, and some states also exempt R&D-related materials from sales and use tax.  Learning which business operations fit the federal R&D tax credit standard may therefore help reduce your bottom line on multiple tax bills.

What qualifies? Much of the development that food and beverage companies do every day involves R&D.  For instance, if you want to expand the functionality of a piece of manufacturing equipment instead of buying new equipment for a specific task, the time you spend exploring your options, the supplies you buy for that effort, and any time and materials required to test and further refine the functionality of the adaptations count as R&D costs.

Food development expenses can qualify too.  If you make cookies and want to begin offering a vegan version of those cookies, and say, for example, you are unsure how the substitute ingredients will affect the cookie’s texture, the ingredients you buy to test new vegan cookie recipes count as R&D supplies because of the technical uncertainty as to whether they will produce a good cookie texture.

Did your attempts to create a new cookie, a new carbonation system or an improvement on your packaging system fail?  There is still good news.  Even abandoned or unsuccessful attempts to develop or improve a new product or process qualify for the federal R&D tax credit, as long as they satisfy the other R&D criteria.

Don’t sell yourself short when seeking R&D tax credits. In addition to the cost of supplies and the more obvious purchases, you can also count the portions of employees’ salaries directly attributable to the time they spend on R&D work and 65% of the money paid to outside contractors for R&D.  There are some limitations to what you can claim for contract research expenses, however, so speak to an R&D specialist before claiming them.

Of course, not all product or process developments qualify for R&D tax credits.  Routine maintenance, replacing parts, and quality control (QC) tests do not count as R&D when there is insufficient technical uncertainty involved.  A new version of an existing part should work the same way as the old version and QC is testing for known issues, not to resolve an unknown.  However, carefully documenting exactly what was involved in a particular equipment upgrade could demonstrate that it involved R&D after all, so don’t slack on keeping track of the time, expenses and goals even if you think a particular effort won’t qualify.

Accurate and timely documentation is key. To maximize access to R&D credits, document employee and contractor work accurately and ensure your accounting and asset management systems categorize R&D supplies separately from other parts and supplies.  Engineers, product development teams, and anyone involved in R&D work should write a brief description of each R&D project, taking care to highlight the technical uncertainty they sought to resolve and the work they did to develop the new product or process.

The best defense is a good offense, so consultation with an accountant or attorney who specializes in R&D tax credits will help you protect your company, maximize your allowable R&D savings, and even strategize how forthcoming developments will qualify.  Contact Cassandra Larae-Perez, Gravel & Shea’s Food and Beverage attorney to learn more.

 

Gravel & Shea PC January 17, 2020

Litigator Dan Martin Named Special Counsel

Burlington, Vermont (January 10, 2020): Gravel & Shea recently promoted litigator Dan Martin to Special Counsel. Dan joined the firm in 2016.

“Over the past four years at Gravel & Shea, I have had an opportunity to work with some of the most talented attorneys in the state on a variety of complicated and cutting-edge issues,” said Dan. “I look forward to continuing to collaborate with the Vermont legal community and to providing our clients with exceptional representation and creative solutions to unique challenges.”

Dan’s practice includes a range of civil litigation matters, with a focus on complex commercial disputes. Prior to returning to Vermont and joining Gravel & Shea, Dan worked in the securities litigation and corporate governance group at Weil Gotshal & Manges in New York City.

“We’ve been delighted to have Dan at Gravel & Shea for the past four years,” said Gravel & Shea Shareholder Navah Spero. “His exceptional litigation skills and stellar writing have been a real asset to the firm. And every client who works with Dan is impressed by his sharp analysis and depth of knowledge.”

Gravel & Shea is a full-service law firm in Burlington, Vermont, providing its clients legal services in a wide variety of disciplines, including commercial transactions, civil litigation, real estate, intellectual property, energy, land use and environmental regulation, estate planning, mergers and acquisitions, personal injury litigation, employment law, and family law.

 

Gravel & Shea PC January 10, 2020

Real Estate Attorney Jeff Polubinski Elected Shareholder

Burlington, Vermont (January 10, 2020): Gravel & Shea recently elected Real Estate Associate Jeff Polubinski to Shareholder. Jeff joined the firm in 2013.

“I have thoroughly enjoyed the last six — almost seven — years at Gravel & Shea,” said Jeff. “It’s been a pleasure to work with such a talented and collegial group. I look forward to the next stage of my career here as a shareholder.”

Jeff practices in the areas of real estate, land use development, and environmental law. Before attending and graduating from Vermont Law School, Jeff worked for more than seven years as a geologist at an environmental consulting firm. While there, he assisted developers and institutional clients with the remediation and regulatory compliance associated with the development of contaminated properties, and he worked with clients on the mitigation of indoor air contamination.

“Navigating Vermont’s land use and environmental laws requires particularized expertise,” says Gravel & Shea Shareholder Michelle Farkas. “Jeff’s environmental background and experience brings a depth to our real estate practice that has benefited our clients for nearly seven years. We are thrilled to welcome Jeff to our partnership.”

Gravel & Shea is a full-service law firm in Burlington, Vermont, providing its clients legal services in a wide variety of disciplines, including commercial transactions, civil litigation, real estate, intellectual property, energy, land use and environmental regulation, estate planning, mergers and acquisitions, personal injury litigation, employment law, and family law.

 

Gravel & Shea PC January 10, 2020

Tax and Estate Planning Attorney Livia DeMarchis Elected Shareholder

Burlington, Vermont (January 10, 2020): Gravel & Shea recently elected Associate Livia DeMarchis to Shareholder. Livia joined the firm in 2015.

“I am honored and excited to be a Gravel & Shea shareholder,” said Livia. “Growing up in Burlington, I’ve always had great respect for the firm. It’s a privilege to work with and learn from our talented attorneys and staff, and I love being part of such an excellent team. I look forward to a long career serving my clients as a Gravel & Shea shareholder.”

Livia’s practice focuses on tax and estate planning as well as probate and trust administration. She graduated from Yale Law School in 2010. Prior to joining Gravel & Shea, she completed a clerkship with the Honorable John Dooley at the Vermont Supreme Court and practiced for several years with a large law firm in Boston.

“Livia is a very talented attorney, with superior technical skills and a lovely, gentle manner with clients and their families,” said Gravel & Shea Shareholder Jeanne Blackmore.  “She is a cornerstone of our estate planning practice, and I’m proud to welcome her as a member of our firm.

Gravel & Shea is a full-service law firm in Burlington, Vermont, providing its clients legal services in a wide variety of disciplines, including commercial transactions, civil litigation, real estate, intellectual property, energy, land use and environmental regulation, estate planning, mergers and acquisitions, personal injury litigation, employment law, and family law.

 

Gravel & Shea PC January 10, 2020

Jeanne Blackmore Elected to the American College of Trust and Estate Counsel

Gravel & Shea is proud to congratulate Shareholder Jeanne Blackmore on her election to the American College of Trust and Estate Counsel.

The American College of Trust and Estate Counsel (ACTEC) is a non-profit association of lawyers and law professors focused on improving and reforming probate, trust, and estate laws and procedures. They are also committed to high levels of professional responsibility.

ACTEC has only 2500 fellows throughout the world. To become a fellow, a lawyer must be nominated and must have practiced probate and trust law or estate planning law for at least 10 years. When reviewing nominations, the ACTEC membership selection committee requires an outstanding reputation, exceptional skill, and substantial contributions to the field by lecturing, writing, teaching, and participating in bar activities.

Jeanne was nominated for membership by colleague Willemien Dingemans Miller of Downs Rachlin Martin. “I have worked with Jeanne for years and was pleased to nominate her as an ACTEC Fellow,” says Willemien. “The College’s requirements are rigorous, and I was confident Jeanne would meet them. She’s a great addition to the College.”

Jeanne came to Gravel & Shea in 2009 after spending more than a decade in Ernst & Young’s National Office Tax Practice. Since joining the firm, Jeanne has given numerous presentations on best practices in trust and estate law and authored a chapter on fundamental estate planning in A Practical Guide to Estate Planning in Vermont while providing exceptional service to her clients.

“It’s such an honor to be invited to join ACTEC,” says Jeanne. “I really look forward to the educational and professional growth opportunities ACTEC membership affords.  I’m also grateful for, and flattered by, the support of local ACTEC members such as Willemien.”

Jeanne is listed in New England Super Lawyers and Chambers High Net Worth Guide and has an AV Preeminent Peer Review Rating in Martindale-Hubbell.

Gravel & Shea PC December 2, 2019

Gravel & Shea Ranked Tier 1 By Best Lawyers® for 13 Practice Areas

In conjunction with U.S. News & World Report, Best Lawyers® just released its 2020 “Best Law Firms” rankings. Gravel & Shea is proud to have once again been ranked Tier 1 in Burlington for 13 practice areas:

  • Appellate Practice
  • Commercial Litigation
  • Corporate Law
  • Criminal Defense: General Practice
  • Criminal Defense: White Collar
  • Employment Law – Management
  • First Amendment Law
  • Litigation – Labor & Employment
  • Litigation – Real Estate
  • Mergers & Acquisitions Law
  • Personal Injury Litigation – Plaintiffs
  • Real Estate Law
  • Securities / Capital Markets Law

According to a press release issued by U.S. News & World Report and Best Lawyers®, receiving a tiered ranking “signals a unique combination of quality law practice and breadth of legal expertise.”

Tim Smart, executive editor at U.S. News & World Report, stated that “choosing the right law firm can be a vital decision. The rankings draw on U.S. News’ 35 years of experience evaluating complex institutions to help individuals and companies alike make the best decisions.”

Gravel & Shea also ranked tier 2 in Burlington for bet-the-company litigation, corporate governance law, and medical malpractice law – plaintiffs.

Gravel & Shea PC November 8, 2019

Super Lawyers Honors Twelve Gravel & Shea Attorneys

We are pleased to congratulate 12 Gravel & Shea attorneys, who have been recognized by Super Lawyers 2019 as Super Lawyers, Rising Stars and Top 100 New England attorneys in New England Super Lawyers.

Super Lawyers uses a patented, multi-phase selection process to create its annual directory of outstanding attorneys. The Super Lawyers team completes independent research on nominated attorneys, looking at 12 indicators of professional achievement and peer recognition, such as verdicts and settlements, transactions, and special licenses or certifications. A Blue Ribbon Panel then evaluated candidates. Rising Stars are chosen from Vermont lawyers under 40 or practicing fewer than 10 years.

The 2019 Gravel & Shea recognized attorneys are:

Jeanne C. Blackmore: Estate Planning & Probate, Tax

Livia K. DeMarchis (Rising Star): Estate Planning & Probate, Tax, Business/Corporate

Heather Rider Hammond: Employment & Labor

Robert B. Hemley (Top 100 New England Attorney): General Litigation, Personal Injury—General, Personal Injury—Medical Malpractice

Pauline Law (Rising Star): Business/Corporate, Securities & Corporate Finance, Employment & Labor, Intellectual Property

Daniel J. Martin (Rising Star): Civil Litigation, Securities Litigation

William A. Mason: Mergers & Acquisitions, Securities & Corporate Finance, Banking

Jerome F. O’Neill: Personal Injury—General, Professional Liability, Personal Injury—Products, Business Litigation

Robert F. O’Neill: Personal Injury—Medical Malpractice, Family Law, Criminal Defense

Jeffrey O. Polubinski (Rising Star): Real Estate, Land Use/Zoning

Robert H. Rushford: Real Estate, Environmental

Navah C. Spero (Rising Star): General Litigation, Estate & Trust Litigation, Employment Litigation, Business Litigation

2.5% of nominated attorneys are selected as rising stars. 5% of nominated attorneys are selected as Super Lawyers.

Gravel & Shea PC October 22, 2019

New USPTO Regulations Require Foreign-Domiciled Trademark Owners To Use A U.S.-Licensed Attorney

New United States Patent and Trademark Office (“USPTO”) regulations effective August 3, 2019 require that all “foreign-domiciled” trademark applicants, registrants, and parties to Trademark Trial and Appeal Board (“TTAB”) proceedings appoint a U.S.-licensed attorney to represent them before the USPTO.  This includes Canadian trademark applicants and owners.

See: https://www.uspto.gov/trademark/laws-regulations/trademark-rule-requires-foreign-applicants-and-registrants-have-us

Why the change?  According to the USPTO, the change was necessary to preserve the accuracy and integrity of the trademark register, to guard against an increasing incidence of fraud affecting the international business community that relies on the trademark register and to increase compliance with U.S. trademark law and regulations, cutting down on improperly crafted submissions.

The new regulation applies not only to new applications, but also to any submission to the USPTO made after the effective date, including responses to office actions or other filings (including Declarations of Use, renewals and other necessary filings) relating to applications submitted before August 3rd.

We know this is a source of frustration for the many experienced trademark owners and intellectual property practitioners domiciled outside the U.S. who practice with expertise and integrity.  Canadian practitioners who have worked with the USPTO for years, even those who benefit from the reciprocal arrangements of the USPTO Office of Enrollment and Discipline (“OED”), will still need a U.S.-licensed attorney to file formal responses and correspond with the USPTO.  The experienced intellectual property counsel of Gravel & Shea are ready to assist our international partners with their USPTO filings as well as to provide guidance and counsel to trademark applicants within and without the United States.

For more information contact: 

Cassandra LaRae-Perez, Gravel & Shea PC, 802-658-0220 Ext. 213, claraeperez@gravelshea.com

 

Gravel & Shea PC October 2, 2019

Attorney Pauline Law Returns to Gravel & Shea

Gravel & Shea is delighted to welcome Pauline Law back to the firm’s corporate practice. Pauline practiced with Gravel & Shea from 2012 to 2018, and briefly relocated to Baltimore, Maryland, during her spouse’s fellowship in surgical critical care at Johns Hopkins Hospital.

“I’m excited to be back at a firm that combines a first-rate legal practice with a deep dedication to the community,” says Pauline. “And of course, I’m very glad to be in beautiful Vermont again.”

While in Baltimore, Pauline practiced at a large DC-based law firm advising privately-held businesses in the biomedical, cybersecurity, marketing/advertising and telecommunications sectors. Pauline will continue advising Gravel & Shea clients on mergers & acquisitions, debt and equity financings and technology transactions.

“We are all thrilled to have Pauline rejoin Gravel & Shea after her stint in Baltimore,” says Gravel & Shea Managing Partner Bob Rushford. “We were disappointed to see her go, and our corporate clients will definitely benefit from her return.”

Prior to joining Gravel & Shea in 2012, Pauline received her J.D. from the University of Pennsylvania Law School and a Business & Public Policy Certificate from the Wharton School of Business and holds a B.S. in Economics and Chinese Studies with a minor in Physics from Carnegie Mellon University.

Gravel & Shea is a full-service law firm in Burlington, Vermont, providing its clients legal services in a wide variety of disciplines, including commercial transactions, civil litigation, real estate, intellectual property, energy, land use and environmental regulation, estate planning, mergers and acquisitions, personal injury litigation, employment law, and family law.

Gravel & Shea PC September 24, 2019

Attorney Chase Whiting Joins Gravel & Shea

Gravel & Shea is proud to welcome Chase Whiting to the litigation team. Chase will work with the litigation team on all aspects of state and federal litigation.

“I am thrilled to work alongside Gravel & Shea’s skilled litigators to help our clients achieve their goals. The depth of expertise here is truly remarkable. To practice with attorneys of this caliber and in the wonderful state of Vermont is an unparalleled opportunity.”

Chase joins Gravel & Shea after completing two judicial clerkships — for the U.S. District Court, Maryland and for the Massachusetts Supreme Judicial Court. Chase graduated magna cum laude from Georgetown University Law Center, where he was Editor-in-Chief of the American Criminal Law Review.

While a student, Chase worked as a senior analyst on strategic initiatives at Georgetown University, interned as a student attorney at the Institute for Public Representation, and served as a law clerk for the Obama Administration.

“We’re excited to have Chase joining us here at Gravel & Shea,” says Gravel & Shea Partner Navah Spero. Chase is smart and hard working. His background as a law-clerk at the trial-court and appellate-court level will make him an invaluable part of our litigation team. Chase graduated from UVM, and we’re delighted that he chose to return and build his practice in Vermont.”

 

 

Gravel & Shea PC September 11, 2019